High Tech a Vibrant Exception to a Generally Stagnant Export Year

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An employee works at a laptop computer at the Jerusalem Venture Partners JVP Media Labs, situated in the JVP Media Quarter in Jerusalem, Israel, on Wednesday, Oct. 21 , 2015.
A high-tech worker in Jerusalem.Credit: Bloomberg

With 2015 all but over, it’s clear exports this year have slumped, though high-tech is a bright exception. Israel exported about $92 billion in goods and services in 2015, a 7% decline from 2014, the Israel Export Institute says.

When sales by startups and of diamonds are excluded, Israel exported $84 billion, down 5%.

“The export figures for 2015 reflect the tough year that Israeli exporters had,” said the chairman of the export institute, Ramzi Gabbay.

“Declines were recorded in the export of goods and services, with the only bright spot being high-tech exports, which increased contrary to the general trend. These figures are part of a worrying trend in which the growth rate of Israeli exports is smaller than the growth rate of global trade.”

Industrial high-tech exports posted an 11% increase to $23.3 billion. High-tech industrial exports now represent more than half of Israel’s industrial exports.

Still, the jump was mostly due to a sharp rise in the export of electronic components, and about 80% of that is attributable to one company, multinational chipmaker Intel.

The U.S. giant has a major presence in Israel. Intel’s exports came to about $5 billion, more than 20% of all high-tech industrial exports this year and about 9.5% of all merchandise exports, the Israel Export Institute said.

Teva’s outsized role

Exports of pharmaceutical products were also a bright spot this year. They increased 5% to $6.8 billion, of which generics giant Teva Pharmaceutical Industries had a whopping 90% share.

Teva has an outsized role not only when in pharmaceutical exports but in the overall export picture, accounting for about a quarter of Israel’s industrial exports and 11% of the country’s merchandise exports.

There was also a major jump – 40% – this year in the export of aircraft, to $2.7 billion. Export figures in this sector have been influenced, as they are every year, by a small number of huge transactions. The sector also has a small number of local producers, led by Elbit Systems, Israel Aerospace Industries and Rafael Advanced Defense Systems.

In other industries linked to high-tech – medical equipment and electronic and optic instruments – there is a larger number of players, the Israel Export Institute noted.

As a result, these companies constitute a better overall gauge of the situation in the sector. When measured by the export performance of those segments of the industry, there was actually a 5% decline, from $8 billion in 2014 to $7.6 billion this year.

Looking at the destination of the country’s exports, $13.6 billion went to the European Union. That’s 30% of total exports, but the figure also represented an 11% decline this year in sales to the European Union.

Comparable exports to the United States came to $11 billion, a 2.5% rise over 2014 and 24% of all Israel’s merchandise exports this year.

The figure for Asia was $11.5 billion, up an impressive 16% over 2014. Merchandise exports to Asia this year represented a quarter of all such exports.